Geithner's dirty little secret - Asia Times

[Tierra_y_Libertad]

This is only a part of a long article about the state of things. The author goes on to call for the top 5 banks to be put in bankruptcy receivership or nationalized. Then after an independent audit, broken up and sold.

http://www.atimes.com/atimes/Global_Economy/KD03Dj02.html

Today, five US banks, according to data in the just-released Federal Office of Comptroller of the Currency's Quarterly Report on Bank Trading and Derivatives Activity, hold 96% of all US bank derivatives positions in terms of nominal values, and an eye-popping 81% of the total net credit risk exposure in event of default.

The top three are, in declining order of importance: JPMorgan Chase, which holds a staggering $88 trillion in derivatives; Bank of America
with $38 trillion, and Citibank with $32 trillion. Number four in the derivatives sweepstakes is Goldman Sachs, with a mere $30 trillion in derivatives; number five, the merged Wells Fargo-Wachovia Bank, drops dramatically in size to $5 trillion. Number six, Britain's HSBC Bank USA, has $3.7 trillion.

After that the size of US bank exposure to these explosive off-balance-sheet unregulated derivative obligations falls off dramatically. Continuing to pour taxpayer money into these five banks without changing their operating system, is tantamount to treating an alcoholic with unlimited free booze.

The government bailout of AIG, at more than $180 billion so far, has primarily gone to pay off AIG's credit default swap obligations to counterparty gamblers Goldman Sachs, Citibank, JP Morgan Chase and Bank of America, the banks who believe they are "too big to fail". In effect, these institutions today believe they are so large that they can dictate the policy of the federal government. Some have called it a bankers' coup d'etat. It definitely is not healthy.

[jpak]

1. $88 trillion in derivatives - music to a Free Marketer's ears...*sigh*...*swoon*...

:puke:

[leftchick]

2. it certainly is not a secret

to anyone paying attention. AIG/Goldman/Citi crooks running the show? wtf do we expect?

[marketcrazy1]

3. the big banks ARE in control now

everything that has been done is to to support their fraud and incompetence. the PPIP is a money laundering operation for the big banks. this morning the FASB relaxed accounting rules so that banks can hold assets on their books without writing them down to market value. ALL the big banks will now be "profitable" the DOW is up 273 points on this news, bank stocks are leading the way!! no one seems to care that TAXPAYERS will be the losers in these plans quite possibly to the tune of near a trillion dollars! the AIG bailout is just another method of shifting more FED dollars to banks in a sort of "stealth" bailout. GM will file bankruptcy because it will be more profitable to largest bond holders who may have hedged their potential losses with credit default swaps written by...............AIG!! since the government will pay these at 100 cents on the dollar as has already been seen, it would make more sense "profit wise" to NOT agree to any modifications of these bond deals with GM since their CDS hedge will pay 100 cents on the dollar they will actually make MORE than they thought on bankruptcy. but who cares as long as the stock market goes UP! IF GM actually goes bankrupt AIG will need another 50 to 80 billion to cover the CDS contracts they likely have written against GM failure. unemployment continues to rise while home values continue to fall but the market is going up........ for now!!!

[rhett o rick]

4. What can mainstreet do?? nm

[cdsilv]

5. hedge funds should be dismantled and outlawed.....

...if you've got money in one, so sorry, all gone.

[earth mom]

6. K & R & Bookmarked. nt

[leftstreet]

7. K&R

[PA Democrat]

8. For perspective on the size of the problem, the US GDP for 2008- $14.3 trillion.

[girl gone mad]

9. As recently as February..

we were being told that these interest rate derivatives were not a threat because they were fully hedged and the problem was contained to Credit Default Swaps. Oops. The latest OCC quarterly report revealed that banks lost 9.2 billion on interest rate derivatives.

http://www.occ.treas.gov/ftp/release/2009-34a.pdf (pdf)

[GeorgeGist]

10. Link to the dirty data ...

http://www.occ.gov/ftp/release/2009-34a.pdf

total risk > 200 $Trillion.

[SammyWinstonJack]

11. K&R